Send message of prudence in petrol price floor of RM3, says Fomca

NST Online - 24 November 2008

KUALA LUMPUR: RM3 as the retail floor price for a litre of petrol is what the Federation of Malaysian Consumer Associations (Fomca) would like to see.
"We should set a floor price that would encourage the prudent use of petrol, promote the use of public transport and push for development in alternative energy," Fomca secretary-general Muhammad Sha'ani Abdullah said when contacted by the New Straits Times yesterday.

Sha'ani said a floor price of RM1.92 per litre was too low to regulate the price of petrol. That was the price at the pump before the meteoric hike in price by 78 sen on July 1.

"Continued reductions in pump prices will only benefit those who drive their own vehicles but leave out low-income earners and the poor who do not own vehicles.

"At the same time, people will stop thinking about prudence in petrol use and start using their cars more, and then our roads will be jammed again."
Since the July 1 high of RM2.70 per litre of petrol, the government has been reducing prices in tandem with the fall in global crude oil prices. There is speculation that by early next month, pump prices will be below the pre-July prices.

Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad has proposed a price floor plan.

Yesterday, Shahrir gave the assurance that every detail would be considered before the government decided whether to implement a price floor plan for the pump.

He stressed that everyone must acknowledge that global oil prices were bound to go up at some point so the government would need something to fall back on.

"In the end, the money (for subsidies) has to come from somewhere.

"Even if we save the subsidy for petrol, it will still go to the consolidated fund, which in turn will be used for something else for the benefit of the people.

"Whatever the case, just wait for Dec 1 and the Economic Council will decide on it (price floor plan)."

The Consumers Association of Subang and Shah Alam (Cassa) agrees that the price floor plan is workable.

Cassa president Datuk Dr Jacob George, however, cautioned against imposing a price floor that was too far removed from the prevailing global crude oil price.

"We should not be seen as tampering with market forces because it may be viewed as Malaysians being unable to handle (the economic crisis)."

Both Sha'ani and George agreed that the crux of change lay in consumer habits.

Consumers, they said, must keep tabs on their petrol consumption and avoid waste.

The associations advised consumers to find an alternative mode of transport for their daily commute and consider at least a partial shift to public transport.

"Everyone is talking about saving 10 or 15 sen at the pump, but ultimately it is the millionaire who enjoys the low prices as this does not have much impact, if any, on the mid-income class," Sha'ani said.

He stressed that instead of pushing for lower prices of goods, the government should focus on bringing down the overall cost of the use of public amenities such as public transport, medical care and education.

Sha'ani noted that by allowing the private sector more freedom to set their own prices, it would help spur the economy and reduce the stranglehold of a handful of companies that monopolised the sale of certain goods such as sugar and flour.

George agreed that it was necessary to "get rid" of cartels and parallel importers, who he said were stifling the development of healthy competition among businesses.

"We need to promote competition which is good for everyone, and this is where we all can come together and come up with a plan which is fair and reasonable for both consumers and the business community.

"Consumers and the private sector need to compromise and this is where the government can play its part, by helping both sides come to a consensus.

"This is not the time for protests. This is the time for prudent thinking and we all need to be accountable and work according to our conscience." -